When they looked back on 1997, Sweden’s government ministers would be able to reflect on one major achievement. After an arduous process begun in 1991, they could finally claim victory in their battle to stabilize the government’s finances. The national budget, burdened throughout the 1990s by economic weakness and overspending on welfare, would be balanced in 1998, the government announced in its April budget.

This represented a notable achievement, considering that Sweden’s annual budget deficit had recently been 12.3% of gross domestic product. It came, though, at the price of popularity for the ruling Social Democratic Labour Party (SAP). Public discontent with high unemployment and continued cuts in welfare spending triggered a downward swing in the SAP’s opinion-poll standings. Midyear polls showed the SAP, long unchallenged as Sweden’s largest political grouping, trailing the main opposition conservative Moderate Coalition Party for the first time in many years. As 1997 ended, however, the SAP--facing a general election in 1998--had regained a narrow lead.

As the year wore on, Prime Minister Göran Persson’s administration could take solace in a decline in the unemployment rate. The official unemployment figure--which excluded the tens of thousands on government-funded work and training projects--had hovered persistently at 8% since the government took power in 1994. In November, however, the figure fell suddenly to 272,000, or 6.5%, the lowest level in five years. Economists attributed the improvement to a healthier economy and the impact of a large-scale government training program announced earlier in the year.

Indeed, such was the newfound health of the economy that Sweden found itself among the group of European Union countries qualified to form the planned European single currency in 1999. The nation was, however, deeply skeptical about many of the plans of the EU, and it came as no surprise in June when the government announced the country’s nonparticipation in the monetary union, declaring the project to be "very uncertain."

Outside the political and economic domain, 1997 was punctuated by a string of revelations that discomfited the establishment. The year got off to a sour start in January with newspaper revelations that Sweden may have used as much as seven metric tons of gold bought from Nazi Germany, despite suspicions that the gold may have been stolen from victims of persecution. The disclosures, based upon documents in the Riksbank (central bank) archives, set the scene for the launch of a government inquiry in February into neutral Sweden’s role during World War II.

In August the country was rocked by allegations that some 60,000 people, mostly women, were forcibly sterilized as part of a government-sponsored eugenics program between 1935 and 1976. The Health and Social Affairs Ministry ordered an independent inquiry into the role played by politicians and medical officials in regard to the sterilization of the mentally retarded and of Swedes from non-Nordic ethnic backgrounds, under laws that were not repealed until 1976.

Barely a month later a fresh political row erupted. This time the claims were that SŠpo, Sweden’s security service, had breached a parliamentary edict that in the 1960s banned the keeping of dossiers on citizens because of their political views. It emerged that well into the 1970s SŠpo had monitored and compiled files on people with left-wing leanings. The formerly communist Left Party and four other parties demanded an independent commission to examine SŠpo’s actions. The government conceded the establishment of a parliamentary inquiry but rejected the setting up of a commission, saying it was confident that the compilation of dossiers for political reasons had not been prevalent.

Perhaps the most significant decision made during the year was to begin the controversial shutdown of Sweden’s nuclear power industry. Defying a hail of criticism from industry, trade unions, and opposition parties, the SAP announced that the first of the country’s 12 reactors would close in 1998, in line with a referendum decision in 1980. As of 1997, nuclear power supplied half of Sweden’s electricity needs, but the government insisted that the country could meet the deficit by saving energy and increasing the use of alternative energy sources.

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